Consol: shares surge on talk of takeover

Shares in South African glass packaging firm Consol Ltd. rose 18% on 20 July 2006 on news of a proposal that might result in an offer for its entire issued share capital.
The group, capitalised at ar…

Shares in South African glass packaging firm Consol Ltd. rose 18% on 20 July 2006 on news of a proposal that might result in an offer for its entire issued share capital. The group, capitalised at around ZAR 4.42 billion (USD 627.4 million), gave no further details in a statement. “I think the interest is coming from an offshore player, it may even be private equity…I think the market may be expecting up to ZAR 17 for the shares”, a Cape Town-based analyst said. In June 2006, the firm said it expected annual earnings to rise by as much as 5% compared to 2005 and that its growth was limited by the stronger rand, which affected products competing directly with imports. Consol is South Africa“s largest glass packaging firm and was part of branded consumer products group AVI before it was spun off at the end of February 2005. The analyst said Consol may have been unattractive for the market because of its low earnings growth, but there were good prospects for the industry. In October 2005, South African packaging firm Nampak sold off its glass unit to Germany“s Wiegand Glas for EUR 18 million and agreed a joint investment programme of a further ZAR 320 million (USD 50.24 million). Wiegand-Glas, which operates two glass plants in Germany with an annual capacity of 500,000 tonnes, saw this as an exciting opportunity to become part of the Southern African glass market, Nampak said at the time.